It is believed that the market size of bankruptcy claims trading is approximately $25 billion per year. However, bankruptcy claims trading is known and performed by a relatively small number of sophisticated buyers that understand and follow bankruptcy filings. A conventional bankruptcy process involves one or more buyers monitoring cases filed in the U.S. Bankruptcy Court, in which the buyer has expressed an interest. The buyer may then contact the sellers of the asset(s) of the bankrupt organization at key information points. The buyer and seller may negotiate a price for the assets or a bankruptcy trustee may order a sale of the assets, for example, through an auction, to obtain the highest price a buyer may be willing to pay.
Depending on the sophistication of seller and their credit exposure, there is often little or no information regarding a fair market price of the bankruptcy asset(s). Similarly, there is no established method for a buyer to determine a fair market price of the bankruptcy assets. Difficulty in determining a fair market value for claims and a limited trading community further hinders the auction process. Hence, in an auction of bankruptcy assets a seller may not know whether the value received is too low and, correspondingly, a buyer may not know whether the price paid is too high.
Hence, there is a need for a method and system that creates an effective environment for trading in the sale of bankruptcy assets which can also determine a valuation of bankruptcy assets based on previous or similar sales and/or transactions.